Wednesday, May 09, 2007

Paperstand (AT, GE, CMG)

The WSJ reprots that at least 3 groups of private-equity buyers have formed to pursue a potential purchase of Alltel (AT). The groups of suitors each have begun a series of meetings with Alltel's management, which has indicated to investors that it is pursuing strategic alternatives. The groupings include Blackstone Group and Providence Equity Partners; TPG Capital and the private-equity arm of Goldman Sachs; and Carlyle Group and Kohlberg Kravis Roberts.

“Heard on the Street” column out saying increasingly restive General Electric (GE) shareholders, frustrated with 6 years of meager returns, are pressuring Chmn Jeffrey Immelt to break up the co. But some shareholders and analysts argue that GE's sprawling businesses are better off together than apart. GE's big umbrella, these investors say, can balance differing product and economic cycles, while helping all its businesses financially. And that would boost the stock price over the longer term. Merrill Lynch analyst John Inch, who last year advocated spinning off or selling the consumer-finance and NBC Universal entertainment units, appears to have had second thoughts. In a note, Mr. Inch suggested that the technology-savvy Mr. Immelt could strengthen GE by bolstering its media-and-entertainment division with an Internet-focused acquisition. The "keep GE together" crowd appears to have a strong ally in Mr. Immelt, who has resisted past calls to sell NBC Universal. Mr. Immelt has repeatedly expressed his frustrations with GE's stock price, which is down 7% since he took over in Sep’01. "It's a no-brainer they should be thinking about it," says Jim Bitter, of Wilmington Trust Investment Mgmt. Mr. Bitter doesn't expect Mr. Immelt to take immediate action, but he says investors "will move away from the stock" if there are no changes at GE.

Barron’s Online “Inside Scoop” section reports that investopr interest in Chipotle Mexican Grill (CMG) turned hot last week following the co's 1Q earnings, but insider sentiment was decidedly more mild as 2 execs sold nearly $6.3m in shares. President, COO and Director Montgomery Moran sold 10K class A shares on Fri for a total value of almost $784K. Chmn and CEO Steve Ells also sold significant amounts of shares last week, including 56K class B shares for more than $3.9m. While the sales were part of an automated sales plan, or a 10b5-1 plan, last week's transaction marked a significant upswing from Ells' prior planned sales, which had come in lots smaller than 6K shares. Meanwhile, Ells exercised 20K options for class A shares and sold the stock for $1.6m. The insider selling and high valuation should cause shareholders some concern, says Jonathan Moreland, director of research at InsiderInsights.com.

DigiTimes reports that Taiwan Semi(TSM) is expected to ramp up its production of Intel's (INTC) 802.11n Wi-Fi chips at 0.13-micron in the 3Q. TSMC is already producing the Intel chips in small volume, as Intel's 802.11n Wi-Fi modules are expected to hit the mkt this month. The collaboration for the Wi-Fi marks a step towards closer collaboration between TSM and Intel. Meanwhile, TSM has seen increased orders at the 90nm process. Altera (ALTR) has announced that its low-cost Arria GX family of transceiver-based FPGAs will be manufactured at TSM's 90nm process. Texas Instruments (TI) reportedly is expected to increase its output of LoCosto handset single chips at the 90nm node from TSM in the 2Q. TI has also been said to be splitting its 45nm business between TSM, United Micro (UMC) and a yet-to-be-determined foundry. TSM's board of directors yesterday approved capital appropriation of $205m for expanding 45nm process capacity at the foundry's Fab 12.